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Sun Lee Importers has a cost of debt of 9 %, a cost of equity of...

Sun Lee Importers has a cost of debt of 9 %, a cost of equity of 14 %, and a cost of preferred stock of 10 %. The firm has 87,000 shares of common stock outstanding at a market price of $27 a share. There are 30,000 shares of preferred stock outstanding at a market price of $41 a share. The bond issue has a total face value of $750,000 and sells at 99 % of face value. The company's tax rate is 35 %. What is the weighted average cost of capital for Sun Lee Importers?

Multiple Choice

  • 12.00 %

  • 11.89 %

  • 11.93 %

  • 11.38 %

  • 11.46 %

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Answer #1

Particulars Debt amount $742,500 Weights used 0.1718 cost of capital weighted cost 5.85% 0.01005 Preferred stock $1,230,000 0

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